DESCRIPTION (Applicant's Abstract): Previous research suggests that positive illusions (self-aggrandizing self-perceptions, the illusion of control, and unrealistic optimism) are associated with indicators of mental health. This application proposes a program of experimental research to examine the benefits and liabilities of these illusions. Manipulations are proposed that reliably enhance positive illusions: their effects on persistence, motivation, performance, and psychological adjustment will be assessed (Studies 1-2, 8-10). The research also addresses the potential limitations of positive illusions. Specifically, if people hold them, how do they incorporate valuable feedback and negative information into their decisions and courses of action? Proposed research tests the hypothesis that people incorporate negative feedback by virtue of deliberative processes that substantially reduce positive illusions (Studies 3-4). We also propose an investigation that charts the ebb and flow of positive illusions across the course of a project (Study 5), predicting that illusions are responsive to feedback, making people realistic in their thinking at times when that is functional. What happens when positive illusions are disconfirmed? We examine the effects of disconfirmed illusions in a sample of initially asymptomatic HIV infected gay men who either hold positive illusions or not and whose heath either deteriorates or not over the subsequent course of the study (Study 6). Critics of the positive illusions framework suggest that they represent repression or denial in an apparently healthy guise. Study 7 proposes an in-depth questionnaire and interview study with 120 adults to test two models of mental health and distinguish empirically between denial or repression and positive illusions. In the last three studies (Studies 8-10), we employ manipulations of positive illusions to try to improve people's ability to cope with certain life problems, specifically procrastination, poor planning, and depression.